Secretary Bessent drops U.S. auto loan deduction bombshell

On Wednesday, January 7, U.S. Treasury Secretary Scott Bessent addressed a large headwind to the U.S. car manufacture -- affordability -- saying the medication is moving connected a important taxation interruption that could assistance galore buyers.

The determination is surprising, fixed that President Donald Trump precise precocious called the U.S. affordability situation a hoax. Still, Bessent's comments suggest the medication is laser-focused connected improving affordability during an predetermination year.

In 2025, tariffs and the menace of rising prices prompted galore car buyers to bargain a caller vehicle, resulting successful the strongest marketplace successful years.

Retail consumers spent $620 cardinal connected caller vehicles past year, according to Automotive World, citing J.D. Power data, a astir 6% summation from the erstwhile year. The summation was driven by a menace that ne'er truly materialized.

“Despite much speculation regarding large increases successful caller conveyance prices owed to tariffs, the existent increases, arsenic correctly predicted by J.D. Power, person been muted,” the steadfast said.

But contempt the muted interaction from tariffs, affordability remains an issue.

“The manufacture is not without its challenges, however. Affordability pressures stay significant, with monthly concern payments reaching a caller grounds for the period of December astatine $776,” said Thomas King, president of OEM solutions astatine J.D. Power.

A operation of precocious prices and stubbornly precocious involvement rates connected loans has Americans turning to riskier recognition agreements to marque their caller car purchases, straining wallets.

On Wednesday, U.S. Treasury Secretary Scott Bessent offered immoderate much-needed alleviation to car buyers who are struggling to spend a caller vehicle.

The Treasury announced that it is implementing a No Tax connected American Car Loan Interest regularisation that offers eligible taxpayers a $10,000 deduction per twelvemonth successful car indebtedness involvement for cars purchased during Trump's 2nd term.

Related: US legislator says Ford CEO Jim Farley 'scared' of $19 cardinal issue

• GM: 2.83 cardinal vehicles (+5.1% twelvemonth implicit year); 17.3% market share

• Toyota: 2.52 cardinal vehicles (+8.4% YoY); 15.5% market share

• Ford: 2.18 cardinal vehicles (+5.6% YoY); 13.4% marketplace share

• Hyundai: 1.84 cardinal vehicles (+7.9% YoY); 11.3% marketplace share

• Honda: 1.42 cardinal vehicles (+0.6% YoY); 8.8% marketplace share
  Source: Cox Automotive

"For millions of Americans, a car isn’t a luxury, it’s however you get to work, school, and childcare," Bessent said connected X.

"This deduction helps little monthly costs and makes car ownership much affordable erstwhile families request it most. The taxation chopped besides supports American workers by applying solely to U.S.-assembled vehicles, strengthening home manufacturing."